New project will enable Swedish companies to benefit from digitalisation

Digitalisation affects almost all industries in Sweden - but many companies lack knowledge about how they can benefit commercially. In a new project, researchers at Luleå University of Technology, together with established companies, will investigate how new business models can be created.

Challenge-driven innovation

Based on digital technologies, the project aims at developing, testing and disseminating methods for sustainable business models in Swedish industrial ecosystems. The project has a budget of SEK 20 million, and is sponsored by the participating companies as well as Vinnova under the Challenge-Driven Innovation program. The project group includes the researchers Vinit Parida, David Rönnberg Sjödin, Wiebke Reim, Johan Frishammar and Åsa Ericson from the Entrepreneurship and Innovation department at Luleå University of Technology. They collaborate with 20 companies in four ecosystems including mining, construction, manufacturing and forestry.

– In our project, we will look at how companies can benefit commercially from digitalisation. A missing piece of the puzzle is the introduction of right business model, says Vinit Parida, Project Leader and Professor in Entrepreneurship and Innovation at Luleå University of Technology.

In the project involving four different industrial ecosystems with about 20 companies, researchers will develop methods for how new types of business models can be designed and implemented. The researchers will investigate how suppliers and customers in industries such as forestry, mining, manufacturing and housing construction can collaborate with new digital actors to offer result oriented solutions instead of offering physical product. Automation in mines for example, means that no single supplier can create the full value for the end-customer, so a group or ecosystem of companies must came together to do this jointly. Digitalisation has meant that industrial actors who have not previously been active in the mining industry have suddenly become relevant, says researchers.

Increase in both profitability and sustainability

Digitalisation enables a more sustainable way of doing business, as companies can work more efficiently with maintenance for example, to extend the lifespan of products and thereby reduce their environmental impact. A company that has come a long way and provided performance-based contracts for over twenty years is Metso, which supplies process solutions to customers in mining. How Metso will act as a strategic partner and help its customers grow is therefore crucial in order to be competitive in the future. They see digitalisation as an opportunity to take the next step, says Vinit Parida.

– The more material transported on the conveyor belt, the more partners in the mining industry will earn. If Metso is not able to deliver this service or promised output, Boliden and LKAB will not make money, resulting in loss for Metso as well. We will investigate and develop new methods, which can enable designing a collaborative ecosystem between different companies that makes everyone a winner, he says.

Stronger Swedish industry

Swedish industry is leading in technological development, but the knowledge of business models for commercialising digital technology is often inadequate. Researchers say that in the long term, it can mean less global competitiveness when other players take over. In order for future companies not to move down the value chain and only deliver hardware, a number of challenges need to be overcome. It is in regards to how to allocate costs fairly, how service contracts should be formed, how data should be made available and how operations should be synchronised with other industrial partners. This implies a greater importance on risk management for the supplier to offer a long-term service instead of just selling a product, says Wiebke Reim, PhD candidate in Entrepreneurship and Innovation at Luleå University of Technology.

– It is new to work across business boundaries in this way and therefore they need to strengthen their ability to handle risks and contracts to ensure they make money in the long run. How business models are designed will be crucial for the digitalisation of companies, says Wiebke Reim.

The researchers are now looking for two new PhD students to work in the project. For more information contact David Rönnberg Sjödin or Vinit Parida.